There seems to be no shortage of banks that want to support Apple Pay, and 20 more have just signed up for the mobile payments service.

Apple chief executive Tim Cook said the other day that 2015 would be the year of Apple Pay. He, of course, knew some things that we didn’t know when he said that.

Morgan Stanley is perhaps the best known of the banks that have just signed up. The investment bank issues premium credit cards to its wealth management services customers. Now those wealthy customers can add their cards to Passbook on their iPhones for mobile payments.

The other banks and credit unions include:

Affinity Federal Credit Union

Cabela’s Club

Central Bank

Credit Union of Southern California

Farmers & Merchants Bank of Long Beach

First National Bank of Omaha

First Sentry Bank

FirstBank

Grow Financial Federal Credit Union

Ideal Credit Union

Redwood Credit Union

State Department Federal Credit Union

Teachers Credit Union

Technology Credit Union

The Northern Trust Company

The Independent BankersBank

United Federal Credit Union

Utah First Federal Credit Union

Apple has now added support for nearly 100 of the more than 700 banks that have agreed to integrate with the service.

About 8 percent of large retailers in the U.S. now support Apple Pay, according to a recent survey by Boston Retail Partners. BRP believes that 38 percent of large retailers in North America will be supporting Apple Pay by the end of this year, and that Apple Pay will be the most widely used mobile payments platform among large retailers.

]]>020 more banks and credit unions sign up for Apple PayRipple's payment protocol comes to the U.S.http://venturebeat.com/2014/09/24/ripples-payment-protocol-comes-to-the-u-s/
http://venturebeat.com/2014/09/24/ripples-payment-protocol-comes-to-the-u-s/#commentsWed, 24 Sep 2014 12:22:50 +0000http://venturebeat.com/?p=1560267Payment network Ripple Labs just snagged its second and third bank partnerships in a quest to create frictionless global payments. CBW Bank, out of Kansas, and Cross River Bank in New Jersey, both say they will use Ripple to make global money transfers and payments. Ripple announced its first bank partnership, with Fidor Bank in Germany, back in […]
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Payment network Ripple Labs just snagged its second and third bank partnerships in a quest to create frictionless global payments.

CBW Bank, out of Kansas, and Cross River Bank in New Jersey, both say they will use Ripple to make global money transfers and payments. Ripple announced its first bank partnership, with Fidor Bank in Germany, back in May.

What’s significant about the adoption of Ripple’s payment protocol is that it allows for same day transfers with better exchange rates than you’d traditionally get. Traditionally, when a person makes an international money transfer from a small bank, that small bank doesn’t have deposits all over the world, so it relies on bigger banks for assistance.

“That bank is going to charge the small bank fees for that. It’s also going to determine the exchange rate for dollar to euro. They’ll say this is the dollar to euro rate and they’ll charge 5% on a dollar-euro exchange rate,” said Ripple CEO Chris Larsen. Plus, once that small bank sends the money to the big bank overseas, it may not know where the money is while it’s in transit, and transfers often take a few days.

“Meanwhile a Wall Street trader might be offering 1/10 that spread,” says Larsen. Ripple’s protocol allows anybody to bid on a currency exchange as long as the initiating bank approves. So when an exchange is entered into the network, Ripple automatically matches it to the best exchange rate for the person making the transfer.

Ripple is able to offer this speedy exchange using a digital asset called XRP — very similar to Bitcoin’s BTC. The difference, Larsen told VentureBeat, is that with Bitcoin a user can’t put another currency, like dollars or euros, into the protocol. Think of XRP as the ferry moving money from the bank to the trader and then to its final destination.

Right now XRP is only valued at half a penny, but Larsen says that as this protocol gains use, it’s value will rise, and since Ripple has a high stake in XRP, it stands to win in the long run if the protocol takes off.

Last month, Ripple co-founder Jed McCaleb agreed not to sell off his 9 billion XRP after leaving the company to start a new project. According to the agreement, he cannot sell more than 10,000 XRP a week for the first year in order to prevent any major disruptions to the currency’s value.

In the meantime, the company will be looking to integrate with small banks in China, Japan, and around the world, as well as to bring more traders to its network.

More information:

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]]>0Ripple's payment protocol comes to the U.S.Online bank Simple acquired by Spain’s BBVA for $117M — will focus on international growthhttp://venturebeat.com/2014/02/20/online-bank-simple-acquired-by-spains-bbva-for-117m-with-a-focus-on-international-growth/
http://venturebeat.com/2014/02/20/online-bank-simple-acquired-by-spains-bbva-for-117m-with-a-focus-on-international-growth/#commentsThu, 20 Feb 2014 16:30:31 +0000http://venturebeat.com/?p=941663Nobody expected this Spanish banking acquisition. Simple, the online bank devoted to offering a more humane alternative to traditional banking, announced today that it’s being acquired by Banco Bilbao Vizcaya Argentaria (BBVA), Spain’s second-largest bank. The $117 million all-cash deal puts Simple in a unique role at BBVA: It will continue to operate independently, alongside […]
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Nobody expected this Spanish banking acquisition.

Simple, the online bank devoted to offering a more humane alternative to traditional banking, announced today that it’s being acquired by Banco Bilbao Vizcaya Argentaria (BBVA), Spain’s second-largest bank.

The $117 million all-cash deal puts Simple in a unique role at BBVA: It will continue to operate independently, alongside BBVA’s other U.S. operations. Simple founder and CEO Joshua Reich remains in his role, and Simple also keeps its board of directors with independent representation.

Simple’s main goal has always been to get rid of the headaches of traditional banking. The company replaces your current bank, and it offers apps that help you easily keep track of your spending habits. Best of all, Simple doesn’t charge any fees.

Why go with BBVA? In an interview this morning, Reich noted, “they have a long history of partnering with banks around the world. They’re huge in Latin America and a number of regions.” And perhaps most important, BBVA has historically kept its partners independent.

Reich also made it clear that Simple didn’t seek out an acquisition because of growth pains. The company’s user numbers great 300 percent last year, and it now has more than 100,000 customers. Simple also says it processed $1.7 billion worth of transactions in 2013 (it reached its first billion dollars in transactions in its first year online). If anything, Reich said, Simple made the deal because it’s doing very well.

One area Simple hasn’t been able to touch yet is something BBVA could be a huge help with: international growth. Reich said there’s been plenty of demand for Simple from consumers all over the world, but the company simply “didn’t have the expertise” to deal with the headache of global banking regulations. BBVA currently does business in 40 countries, so it wouldn’t be that difficult to help Simple out.

BBVA will also put in a “significant amount of capital” to help Simple grow its platform — though Reich wouldn’t disclose exactly how much that will be.

The Portland, Ore.-based Simple has raised more than $15 million from IA Ventures, Shasta Ventures, First Round Capital, and others.

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]]>0Online bank Simple acquired by Spain’s BBVA for $117M — will focus on international growthTarget breach: Millions of credit cards hit black markets (report)http://venturebeat.com/2013/12/20/target-breach-millions-of-credit-cards-hit-black-markets-report/
http://venturebeat.com/2013/12/20/target-breach-millions-of-credit-cards-hit-black-markets-report/#commentsFri, 20 Dec 2013 20:23:03 +0000http://venturebeat.com/?p=875291VentureBeat CEO Matt Marshall had to cancel his credit card this week. But he's not the only one: Millions of cards used at Target have reportedly appeared on underground "card shops" in recent weeks.
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VentureBeat CEO Matt Marshall had to cancel his credit card this week.

Marshall started seeing suspicious charges pop up on his card statements — ironically, from a Calif.-based Target shop. But he’s not the only one: Millions of cards used at Target have appeared on underground “card shops” in recent weeks, according to KrebsOnSecurity, the blog that originally reported the Target breach story.

They’re selling in batches of up to one million cards, with each card going for anywhere from $20 to $100. Crooks can pay for them using virtual currencies like Bitcoin and Litecoin, as well as through wire transfers via Western Union and MoneyGram.

The thieves not only gained access to credit card numbers, but also three-digit CVV security codes, which merchants aren’t supposed to store — demonstrating a blatant disregard for data security best practices (not to mention compliance requirements) on Target’s part. Scam artists can use that information to make purchases at retail stores. If the intruders also gained access to the PINs for those cards, crooks could theoretically use cloned cards to withdraw cash from a victim’s bank account directly from ATMs.

Reached for comment, Bank of America and JPMorganChase representatives provided similar statements to VentureBeat: They proactively monitor customers’ accounts for fraud and will reach out if they see suspicious activity, and customers aren’t liable for any fraudulent use of their cards. Bank of America specifically promised to reissue the cards if necessary.

The banks aren’t thrilled at the prospect of having to reissue thousands or potentially millions of cards. Not only does the process cost around $3 to $5 per card, but it also means lost revenue during the hottest shopping season of the year.

While the precise scope of the Target intrusion is still a bit hazy, it’s undoubtedly one of the largest retail security breaches to date.

“I do not envy anyone that has to respond to a breach like this,” said David Kidd, director of quality assurance and compliance at Peak 10, a provider of cloud data solutions. “Going forward this will be a cautionary tale and, I hope, a learning experience for information security professionals.

“The Payment Card Industry Data Security Standard was intended to protect businesses, consumers, and card issuers from exactly this type of information security breach — and compliance is a critical component of prevention, whether it is internally managed or through a data solutions provider.”

As a result of the breach, Target could face fines from major credit card brands as well as a loss in consumer trust.

In 2007, retailer TJX’s systems were also compromised by hackers. The crooks tapped into the store’s wireless networks to access and steal data from its Massachusetts headquarters, taking off with information from more than 45 million credit and debit cards. TJX faced fines of more than $40 million as a result of the incident.

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]]>0Target breach: Millions of credit cards hit black markets (report)P2P lending platform Prosper lines coffers with $25M in new fundinghttp://venturebeat.com/2013/09/24/p2p-lending-platform-prosper-lines-coffers-with-25m-in-new-funding/
http://venturebeat.com/2013/09/24/p2p-lending-platform-prosper-lines-coffers-with-25m-in-new-funding/#commentsTue, 24 Sep 2013 22:53:59 +0000http://venturebeat.com/?p=818059Prosper powers a peer-to-peer marketplace that connects people who need to borrow money with people who can lend it to them. This brings its total capital raised to nearly $120 million.
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Prosper powers a peer-to-peer marketplace that connects people who need to borrow money with people who can lend it to them. This round follows closely on the heels of the last one — Prosper closed $20 million in January and has raised nearly $120 million in venture capital since its founding in 2006.

Since then, the peer-to-peer lending industry has gain major momentum, and this financing will fuel Prosper’s growth.

Traditionally, people take out loans with banks. Prosper cuts the banks out of this process by connecting people who want to invest money directly with people who want to borrow money. Borrowers list loan requests between $2,000 and $35,000. Individual lenders invest as little as $25 in each loan and earn returns of up to 9 percent.

Prosper has 1,960,000 members and has funded $630 million in personal loans to date.

The financial crisis significantly undermined the trust that the American people have in banks. At the same time, Internet marketplaces have grown significantly, and financial services remains one of the hottest areas for startups to take on. Borrowers and investors are both looking for alternatives to banks when it comes to their financial needs, and companies like Prosper and rival Lending Club are there to provide that alternative.

Prosper had a few issues with the SEC over the years, shutting down in 2008 after receiving a cease-and-desist letter for not properly registering under the Securities Act. It’s back on track now and claims to be growing at 100 percent year-over-year in revenue and new loans.

Stephan Vermut joined as CEO earlier this year, when Sequoia Capital led Prosper’s sixth round of funding, along with his son, Aaron, who will serve as president. Before coming to Prosper, the Vermuts founded a company called Merlin Securities that Wells Fargo bought in 2012.

Sequoia also led this round, with participation from BlackRock.

Christopher Bishko, a partner at Omidyar Network who leads investment in technology-enabled financial services is listed as a director, along with Rajeev Date, the former deputy director of the United States Consumer Financial Protection Bureau.

Prosper is based in San Francisco.

]]>0P2P lending platform Prosper lines coffers with $25M in new fundingPlaid raises $2.8M for API that opens banks up to developershttp://venturebeat.com/2013/09/19/plaid-raises-2-8m-for-api-that-opens-banks-up-to-developers/
http://venturebeat.com/2013/09/19/plaid-raises-2-8m-for-api-that-opens-banks-up-to-developers/#commentsThu, 19 Sep 2013 17:50:46 +0000http://venturebeat.com/?p=815071Plaid has raised $2.8 million to continue building its modern API for banking data.
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Technology is forcing banks to break open their vaults and share their data with the world.

Plaid has raised $2.8 million to grow its API for banks which makes their data more accessible to developers, enterprises, and ultimately, consumers.

The startup is building a developer platform that allows developers to integrate with data from financial institutions and use it to build applications. Banks are traditional difficult to work with. An API is smart way to start making them more developer-friendly.

“As developers in financial technology ourselves, we struggled with the lack of a unified bank API and the low quality of transactional data – so we decided to build the infrastructure to fix it,” said founder Zach Perret in an email. “Financial technology has always had significant barriers to entry, and by simplifying the infrastructure we’re helping developers transform the way businesses and consumers use their financial data.”

Financial services is a hot space right now, and developers and investors alike are salivating over opportunities to modernize the way banking is done. At Y Combinator’s recent demo day, the most buzzed about startup was Standard Treasury which provides a similar product.

In the wake of the financial crisis, banks are facing low interest rates and increasing regulation that compels them to open up their infrastructure and find other ways to make money.

Parret said that since launching the private beta a few months ago, the demand from the developer community as been “overwhelming.” Most of the early traction has been in accounting, tax, expense, and lending, but the opportunities extend beyond financial services and into other industries.

“One of our tax clients built an application that allows users to scan their bank & credit histories to quickly identify deductible expenses,” Parret said. “In the past, you had to mail your statements and receipts to your accountant, who would read through names like SBXUSQ0112x and try to figure out what the transactions mean. Using Plaid, applications allow users to link their accounts and get high-context data on each transaction – cleaning up that transaction to Starbucks Coffee at 41 Union Square West, NYC 10003.”

Spark Capital led this round, with participation from Google Ventures, NEA, Felicis Ventures, and Homebrew Capital.

]]>0Plaid raises $2.8M for API that opens banks up to developersWaze cofounder raises $3M for FeeX, the ‘Robin Hood’ of financial feeshttp://venturebeat.com/2013/08/27/wave-cofounder-raises-3m-for-feex-the-robin-hood-of-financial-fees/
http://venturebeat.com/2013/08/27/wave-cofounder-raises-3m-for-feex-the-robin-hood-of-financial-fees/#commentsTue, 27 Aug 2013 19:00:56 +0000http://venturebeat.com/?p=803532FeeX has built a platform for crowdsourcing financial intelligence. Today it announced closing $3 million led by Blumberg Capital.
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The startup has built a platform for crowdsourcing financial intelligence. Today it announced closing funding of $3 million led by Blumberg Capital.

Four Israeli entrepreneurs cofounded FeeX. One of them, Uri Levine, recently sold his company Waze to Google for an estimated $1.3 billion. Waze uses crowdsourcing to help drivers avoid traffic by providing real-time traffic updates. FeeX takes a similar approach to bringing more transparency to banking.

FeeX’s CEO Yoav Zurel said the goal is to be the “Robin Hood of fees.” The site analyzes financial data from the community and compares the amount that you pay in fees. It gives you a score on its “sucker meter” to let you know how much you are overpaying and to provide greater insight into how much you should be paying.

“When it comes to financial information, financial organizations know everything, and we know nothing,” Zurel said in an interview with VentureBeat. “We estimate that Americans are paying more than $500 billion a year in financial services fees. Fees are eating up people’s savings or retirement fees, and they have no idea.”

FeeX looked at reports from the FDIC, AARP, U.S. Census Bureau, the Federal Reserve, and others to figure out just how much money people waste on fees. The team found that over $150,000 is spent over the course of a career on 401K fees, and seven out of 10 Americans think their 401K plan is free. To address this, they built an engine that connects to your bank account and it will position your financial information against people with comparable financial situations. If you realize that you are paying more than your peers, this information can be used to change plans or negotiate with providers.

Zurel said that there is a “culture of silence” surrounding finances. People are reluctant to discuss their 401K plans with friends and family or seek out help from people who aren’t financial professionals. However, this opacity means information isn’t open enough to protect consumers.

“The crowd can fight back,” Zurel said. “This is a community problem with a community solution. We want to increase transparency and break market asymmetry so individuals don’t have to be keep in the dark. People are waking up and realizing they can rely on the wisdom of the crowd and can yield better results than acting alone.”

The financial industry is going under significant transformation right now. The 2007-’08 financial crisis led the American public to question the trustworthiness and stability of banks and initiated a call for greater transparency. Entrepreneurs have jumped on this demand and are building a products that give some of the power back to consumers. Ribbit Capital is a new $100 million fund dedicated exclusively to financial tech.

“Banks have proven to be difficult environments for innovation to flourish, resulting in an antiquated financial services industry that remains relatively untouched by the technology-driven evolution transforming other markets ranging from social media sharing to professional enterprise services,” said Ribbit Capital founder Meyer “Micky” Malka. “The technology to unlock this innovation is in place, and there are entrepreneurs around the world with groundbreaking ideas that have the potential to turn this industry on its head. What’s lacking is the investment, will and expertise to develop and make them reality.”

Whether its through alternative loan models, like LendingClub, Bitcoin exchanges like Coinbase, or personal financial management solutions like CreditKarma, mistrust in traditional financial institutions and technology are working in concert to break down the barriers between them and their customers.

Like Waze, FeeX launched its pilot in Israel a few months ago and claims to have saved people over $2 million already. Zurel said deploying the platform in Israel helped the company learn about user behavior and perceptions, and these insights will inform its U.S. release, which should happen in a month or two. The company will use this financing to set up offices in New York City and add in more categories of fees.

Check out this infographic from FeeX below:

]]>0Waze cofounder raises $3M for FeeX, the ‘Robin Hood’ of financial feesAvantCredit secures $20M to make financial loans more accessible with big datahttp://venturebeat.com/2013/08/14/avantcredit-secures-20m-to-make-financial-loans-more-accessible-with-big-data/
http://venturebeat.com/2013/08/14/avantcredit-secures-20m-to-make-financial-loans-more-accessible-with-big-data/#commentsWed, 14 Aug 2013 16:12:05 +0000http://venturebeat.com/?p=793690AvantCredit looks at a range of data sources and uses machine learning to determine lending risk, rather than relying solely on a credit score. The platform can approve and fund a loan in near real-time.
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Online lending startup AvantCredit has raised $20 million for its big data technology that assesses loans.

AvantCredit’s platform uses machine learning to determine lending risk, rather than relying solely on a credit score. The platform takes inputs from dozens of data sources while the customer is filling out an application. It applies a range of algorithms to find a customer’s “true” credit worthiness and and can approve and fund a loan of up to $10,000 in near real-time. Cofounder John Sun said this immediacy is something not even banks offer.

“We’re improving the borrowing experience for millions of “near-prime” customers,” he said to VentureBeat. “We’re also able to offer more competitive rates than sub-prime lenders because we’re able to do a better job assessing a customer’s credit worthiness. The goal was to build a product that’s clear, transparent, and easy to use for customers while still doing as much as possible behind the scenes to make sure that customer gets the right product for their needs.”

Near-prime borrowers are people with below average credit scores. Sun said that ever since the recession in 2008, credit availability has become increasingly tight. AvantCredit’s technology searches for patterns in thousands of data attributes. It gets better at predicting customer riskiness as time goes on and generates customized interest rates. This opens up loan opportunities to a wider range of people. The startup has also automated the process so securing a loan doesn’t have to involve multiple trips to the bank and tons of paperwork.

Sun and cofounder Paul Zhang participated in Y Combinator for a startup called Debteye that automated credit counseling. It analyzed people’s financial situation and made recommendations to help get them out of debt. While building this startup, he saw an even greater opportunity in the “huge product-gap” for near-prime customers. Along with CEO Al Goldstein, Sun and Zhang started AvantCredit in 2012.

“We wanted, from the beginning, to really revolutionize the way that people borrow money, by looking at all the things we hated about how people borrowed money today and doing it better,” Sun said.

AvantCredit is one of many startups that has emerged to bring Internet technology to the world of finance. The financial crisis made many people skeptical of banks and interested in alternative sources for managing their money. Lending Club is the most notable example of this. The company is an online community that connects people who need to borrow money with people who are willing to lend it. It is on track to do $2 billion in loans this year.

Lending Club investor Charles Moldow, a partner at Foundation Capital, said the uses of technology in the financial industry are “limitless.”

“We’ve never seen a market opportunity of this size and magnitude,” he said. “In the financial services industry, we are seeing a shift toward the transparency of information. There is a massive restructuring taking place. This is disrupting the traditional banking model as we know it.”

]]>0AvantCredit secures $20M to make financial loans more accessible with big dataSoFi now offers loan relief to students of Stanford, Yale, and about 100 other schoolshttp://venturebeat.com/2013/07/25/sofi-now-offers-loan-relief-to-students-of-stanford-yale-and-about-other-100-schools/
http://venturebeat.com/2013/07/25/sofi-now-offers-loan-relief-to-students-of-stanford-yale-and-about-other-100-schools/#commentsThu, 25 Jul 2013 17:35:00 +0000http://venturebeat.com/?p=784671Social Finance (SoFi) is a startup with a simple solution to the student debt crisis. The company taps college alumni as a funding source for students loans.
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Social Finance (SoFi) is a startup with a simple solution to the student debt crisis. The company taps college alumni as a funding source for students loans.

The strategy seems to be working.

Today, the startup announced that it is covering 100 schools, including pricey Liberal Arts colleges and most of the Ivy League. The idea is that by linking students with alumni, who have an interest in seeing graduates (their investments) succeed, students are far less likely to default on their loans.

SoFi has experienced rapid expansion in a little over a year, primarily by word of mouth. It originally targeted just 40 colleges and universities, with a focus on postgraduates. SoFi now caters to almost 3000 undergraduates and graduates.

The company is experimenting with all sorts of new ways to help student borrowers ascend the career ladder, and pay back loans.

“Now that we’ve reached this critical mass of borrowers, we can do so much with the community that we couldn’t do last year,” said chief executive Mike Cagney.

SoFi now offers support for budding entrepreneurs, networking opportunities, even job placement. In recent months, a handful of students couldn’t find a job after graduation, so SoFi’s alumni network stepped in. These students have subsequently secured employment, and are paying back their loans on time.

SoFi also organizes dinners and speaking events in cities around the country, so alumni and student borrowers can meet and mingle. Many of the alumni are prominent investors, and are eager to connect with developers and tech entrepreneurs.

Cagney saw an opportunity to help these young entrepreneurs, especially those who are crippled with student debt.

After six months of pilot tests, SoFi is also ready to roll out a special program for founders. The idea was inspired by feedback from graduating students. Many said they would like to start a business, but felt they needed a stable job or they wouldn’t be able to pay back their loans.

Through the program, SoFi will provide six months of loan forbearance to would-be entrepreneurs, as well as access to accredited investors and mentors through the alumni network.

SoFi is now accepting applications for its September 2013 program, and the deadline closes in August. It’s bound to be a competitive process; SoFi will vet the business ideas, and run them by the seed investors in their network.

To be eligible, entrepreneurs will need to be a degree-holder from one of SoFi’s 100 participating schools, and must be a loan borrower.

In the long-run, the company may even offer a seed fund of sorts. But first, Cagney said they will likely raise a “modest capital base” to cover basic living expenses for entrepreneurs in the program. SoFi may even provide office space to founders, so they can get to the point where they can present a viable business plan.

“Through the program, we’d like to see about 10 entrepreneurs get their startups up and running, even securing a first round of capital,” said Cagney.

He added that he is particularly partial to startups in the financial services sector. The San Francisco-based team can offer guidance and connect fin-tech founders with potential investors.

Similarly to other startups in the “peer to peer” lending space, SoFi acts as a mediator of sorts. The company raises a pool of capital from alumni at each school, and doles it out in chunks to students. It takes a .75 percent management fee and .5 percent service fee.

SoFi was a revenue-generating business on day one, according to Cagney.

The company originally began as a pilot at the Stanford Graduate School of Business, where many students are struggling to afford sky-high tuition costs. About 60 percent take out loans to finance the two-year education, making it an ideal testing ground.

The pilot went a long way to validate the model — 100 percent of students paid back the loan at a fixed interest rate (now as low as 5.74 percent APR, which is more affordable than a private bank or federal loan. More on SoFi’s loan rates.)

Are you a college student or parent? Would you use a service like SoFi? Let us know in the comment section below.

]]>0SoFi now offers loan relief to students of Stanford, Yale, and about 100 other schoolsBanks ‘galloping ahead’ to help you manage your money on mobilehttp://venturebeat.com/2013/07/09/banks-galloping-ahead-to-help-you-manage-your-money-on-mobile/
http://venturebeat.com/2013/07/09/banks-galloping-ahead-to-help-you-manage-your-money-on-mobile/#commentsTue, 09 Jul 2013 18:46:26 +0000http://venturebeat.com/?p=776819Most of us will not consider our bank to be a hotbed of innovation. But banks are toying with various open source projects, and are rapidly developing ways to help you manage and share money from a smartphone.
]]>SAN FRANCISCO — Most of us will not consider our bank to be a hotbed of innovation. But banks are toying with various open-source projects and are rapidly developing ways to help you manage and share money from a smartphone.

“For an industry that has been tarred with the brush of being old-fashioned, banks have realized they need to innovate fast and are galloping ahead,” said Mark Curtis, chief client officer for Fjord, onstage today at VentureBeat’s MobileBeat 2013 conference.

Traditional banks like American Express and Wells Fargo are constantly adding new features to their mobile apps and are hiring “digital innovation” teams. But one of the most fascinating examples of forward thinking comes from Turkey, where the country’s second largest bank, Garanti Bank, is adopting a “mobile first” approach.

Garanti is in a unique position as it is targeting a population of young and hyper-connected smartphone owners. Approximately 65 percent of Turkey’s population is under the age of 24.

Deniz Güven, Garanti’s senior vice president of digital channels, demonstrated some examples of how the bank is reaching these consumers at MobileBeat 2013.

Those with the Garanti mobile app can send money to their Facebook or Foursquare friends whether they have Garanti accounts or not. In addition, customers can view a snapshot of their accounts without bothering to log in. QR codes are on receipts, and Garanti customers can scan them to get a snapshot of a payment.

The bank is open to partnerships with developers, who have ideas for innovative financial services apps.

“What we see in Turkey is that the idea of a bank as a service — [in future] this will be an important idea for all financial institutions,” Güven said.

In the U.S., the largest banks are experimenting with new technologies but are taking a more cautious approach.

Brian Pearce, Wells Fargo’s senior vice president of mobile and digital innovation, said the firm is also “exploring the bank open API idea very seriously.”

Pearce said they are working with third-party developers so that consumers can securely store their financial information in other apps. For instance, mobile customers can track the value of their house in real time.

Likewise, American Express strategy and innovation lead Joanna Lambert is working with a team of in-house designers to research consumer needs.

After interviewing thousands of people around the U.S., Lambert said she sees opportunities to disrupt financial “infrastructure” by streamlining the process of billing and other accounting services.

Lambert said she is also excited about opportunities in mobile as customers are walking into branches with “a channel in their pocket.” She added, “We are looking at ways to create new sales experiences” for customers logged in to the American Express app on a mobile device.

Lambert pointed out that the regulatory environment is still very challenging for banks and developers in this space. For disruptive newcomers, security is the biggest issue, as customers need to feel that their money is completely safe.

]]>0Banks ‘galloping ahead’ to help you manage your money on mobileDealstruck takes on banks with its ‘Lending Club for small businesses’http://venturebeat.com/2013/06/04/dealstruck-takes-on-banks-with-lending-club-for-small-businesses/
http://venturebeat.com/2013/06/04/dealstruck-takes-on-banks-with-lending-club-for-small-businesses/#commentsTue, 04 Jun 2013 17:07:59 +0000http://venturebeat.com/?p=750654The finance industry is under attack from startups. Dealstruck initiated the latest front of this battle today with its crowdfunding alternative to business loans from banks.
]]>The finance industry is under attack from startups. Dealstruck initiated the latest front of this battle today with its online alternative to business loans from banks.

Its marketplace connects small businesses with a community of accredited and institutional investors. Business owners can bypass banks to access more affordable loans from a crowd with less hassle. On the other side, investors are connected with investment opportunities that promise higher returns than other short-term, fixed income investments.

“People are disillusioned with the banking and financial system, especially after the 2008 crisis,” said cofounder and CEO Ethan Senturia. “While the banks are back to earning record profits, the general population is still trying to recover. And for business owners, much of that recovery depends on access to growth capital. Small businesses drive the U.S. economy, employing more than 50 percent of the domestic workforce and accounting for more than half of GDP. The fact is that without access to affordable capital, businesses cannot expand, create jobs, or reignite the economy.”

Dealstruck is both a marketplace and a loan origination system that actively processes live transactions. It focuses exclusively on providing debt financing to established businesses for between $100,000 and $1 million. Interested businesses fill out an online application form and Dealstruck conducts credit analysis. Lenders also create profiles and select the businesses they want to fund. The technology automates funding, originating, and serving of loans. Senturia said it operates with bank-level security standards and the company has partnered with leading providers of fraud detection, identify verification, business and consumer credit information, and tax transcripts.

“We believe that debt crowdfunding is not an excuse for shortcutting diligence,” he said. “To that end, we retain much of the credit rigor of traditional lenders, but use technology to streamline the bureaucracy, paperwork, and sales process that contribute to costs in time and money for the offline world.”

Crowdfunding has become extremely popular over the past few years. Platforms like Kickstarter and Indiegogo fund creative projects, but startups are also cropping up that challenge traditional finance and use the Internet to build more transparent, accessible opportunities for borrowing, lending, funding, and investing. Lending Club is the best-known example. It is an online community that connects people seeking unsecured personal loans with lenders. Investors fund these loans and automatically receive monthly payments on these loans in their bank accounts. Lending Club is on track to originate $2 billion in loans and generate $90 million revenue in 2013.

Lending Club’s success has encouraged other entrepreneurs to tackle different areas of finance. Groundfloor emerged out of stealth mode last week and revealed its peer-to-peer platform that gives regular people opportunities to invest in real estate projects. Groundfloor’s founder Brian Dally said that banks are driven by centuries of inertia and regulatory infrastructure and hold way too much power — their practices often don’t benefit individuals or businesses. The Internet and startups are changing all that by building new ways to use and grow money, outside the confines of the banking system.

Dealstruck takes these ideas and model and applies it to small and medium-sized business loans. Senturia grew up in a family of entrepreneurs and after graduating from Wharton Business School joined Lehman Brothers in distressed credit research in 2008. The firm went through bankruptcy months later and Senturia quickly came to the conclusion that Wall Street wasn’t for him. He went on to found Dealstruck.

Loans on the site have “risk appropriate” rates of between 5 percent and 15 percent and are secured by business assets and personal guaranties from owners. Competitors include On Deck Capital and Kabbage that provide short-term working capital loans, which Senturia said are smaller, higher-risk, and more expensive than loans on Dealstruck. The startups has funded two live loan requests so far — a $250,000 loan from 21 investors in five days, and a $100,000 loan from 11 investors in under 48 hours. Fifty lenders have already signed up and committed over $1.5 million in lending capital.

]]>0Dealstruck takes on banks with its ‘Lending Club for small businesses’Lending Club shuffles around shareholders to make room for Googlehttp://venturebeat.com/2013/05/02/lending-club-shuffles-around-shareholders-to-make-room-for-google/
http://venturebeat.com/2013/05/02/lending-club-shuffles-around-shareholders-to-make-room-for-google/#commentsThu, 02 May 2013 10:00:51 +0000http://venturebeat.com/?p=729598Google takes a minority stake in online investment community Lending Club as part of a $125 million secondary transaction.
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The deal was part of a $125 million secondary transaction where existing investors sold portions of their shares to new investor Google and previous investor Foundation Capital. No new money is going into the company, rather it is a reshuffling of equity to allow room for Google on the board.

Lending Club is an online community that connects people who need to borrow money with people to lend it to them. Borrowers apply for a personal loan and receive a rate quote. Interested investors fund these loans and automatically receive monthly payments on these loans in their bank account.

“Google was excited about the possibility that Lending Club could transform the banking system,” said CEO Renaud Laplanche in an interview with VentureBeat. “We are using technology and innovation to lower costs, provide more value to our customers, and increase transparency. These are all things Google has done with other sectors, and they are interested in our ability to do that in financial services, which is one of the few last large industries that has not been transformed.”

Lending Club grew by leaps and bounds over the past year and with volume almost tripling. It originated 780 million in loans in 2012 and is on track to do $2 billion this year. As of May 1st, Lending Club had funded $1.67 billion in loans. The company charges an origination fee to borrowers and a servicing free to investors and is on track to generate $90 million in revenue this year. Laplanche said that this impressive traction caught Google’s eye and it approached Lending Club about getting in on the action.

“We talked to our investors and said we wanted Google on the board, but did not want to raise additional capital and wanted them to sell some of their shares,” he said. “There was an increase in share price from last year, which made the transition easier. Our valuation is now at $1.55 billion, up from 550 million, which is a 3 times increase in just twelve months.”

The national average interest rate for unsecured personal loans in the U.S. is just over nine percent, while Lending Club offers between six and seven percent. By circumventing banks, Lending Club is able to offer lower rates. Laplanche had the idea for Lending Club in 2006 after paying 18 percent interest rate on his credit card. He realized that money was helping to fuel an inefficient system and that by allowing people to directly invest in people, it would benefit everybody involved. Now seven years later, the idea has taken off.

With this latest transaction, Laplanche said that things won’t change much initially. Over time, however, there is potential for partnerships. Right now, he is focused on providing the best possible product for consumers. Lending Club primarily deals with unsecured personal loans, but is exploring adding in student loans, auto loans and mortgage loans down the road.

Lending Club has raised $102 million to date and as mentioned above, existing investor Foundation Capital gained a greater stake as part of this deal. This marks the firm’s largest investment ever made over the course of its 18-year existence, with more than $50 million invested.

“We’ve never seen a market opportunity of this size and magnitude,” said general partner Charles Moldow. “In the financial services industry, we are seeing a shift toward the transparency of information and Lending Club is leading the charge. There is a massive restructuring taking place. We believe that Lending Club’s growth has signified that the uses of technology in the financial industry are limitless, extending to a shift in the flow of information, transparency and decision making at all levels. This is disrupting the traditional banking model as we know it.”

Moldow also said that Foundation Capital sees Lending Club as an iconic company akin to Amazon, eBay, Salesforce, or LinkedIn. The financial services industry is massive and ripe for disruption, with large returns to boot. Lending Club has generated 22 consecutive quarters of positive returns for investors and it seems that pattern will only continue. Google will join the board along with such luminaries as Mary Meeker, John Mack, and Larry Summers.

]]>1Lending Club shuffles around shareholders to make room for GoogleIran suspected culprit behind recent attacks on U.S. bank websiteshttp://venturebeat.com/2013/01/09/iran-bank-ddos-attacks/
http://venturebeat.com/2013/01/09/iran-bank-ddos-attacks/#commentsWed, 09 Jan 2013 18:02:26 +0000http://venturebeat.com/?p=601491A number of denial of service attacks have taken down U.S. bank web sites since September. While some have come forward claiming responsibility, other believe Iran may be behind the attacks.
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U.S. “intelligence officials” believe Iran could be the force behind a number of attacks on banking institutions in the United States, according to the New York Times. The attacks, which started in September 2012, focus not on stealing money, but on knocking the bank websites offline.

Financial institutions have had reinstate their websites after cyber attacks overload them, knocking them offline. The affected banks include Bank of America, Wells Fargo, Capital One, HSBC, and Citigroup.

When VentureBeat reached out to Bank of America, the institution said it had no comment on the suggestion that Iran could be behind the attacks.

But James A. Lewis, the director and senior fellow for the technology and public policy program at the Center for Strategic and International Studies, told the Times, “There is no doubt within the U.S. government that Iran is behind these attacks.”

Lewis previous served as an official within the U.S. State Department and the Commerce Department.

The cyber aggression comes in the form of denial of service attacks. These attacks send packets of information at a rate much higher than a server’s ability to process them, overloading the server, and shutting down the website. It’s a fairly common attack since the onset of Anonymous, a group of hackers known for taking political stances and for their propensity to protest using denial of service attacks.

As Forrester analyst John Kindervag notes to the Times, however, the suspected hackers are using more sophisticated methods in their DDoS attacks. Where these attacks are usually launched from individual computers, it seems the attackers have rallied whole cloud networks to send off huge amounts of traffic to the bank servers.

That means Iran, if it is the culprit behind the attacks, could either be building its own private cloud network or somehow stealing less secure, but already established private clouds from other companies. With networks being used to launch the DDoS attacks, that banks are being hit by a substantial force.

Officials also believe the attackers are using a new form of DDoS called encryption denial of service. Since banks process a number of encrypted transactions dealing with the type of data they do, attackers can send hundreds of thousands of encryption requests to overload the servers.

Tactics as complex as these support the idea that the attacks are state sponsored.

A number of groups have come forward to claim the attacks, such as Izz ad-Din al-Qassam Cyber Fighters, who say they attacked the banks because of an offensive video. Others such as a cyber criminal known by the handle “vorVzakone,” posted intent to hack the banks in a campaign called “Project Blitzkrieg” on a Russian forum in September. VorVzakone , however, suggested attackers would hit the banks with malware and actually steal information rather than just knock down websites. Still, McAfee gave weight to vorVzakone’s post, saying Project Blitzkrieg is a “credible threat.”

It seems officials think the former group may just be a front for state sponsored attacks out of Iran, which could be retaliating for recent cyber attacks believed to be joint efforts by the U.S. and Israel. The attacks could also be connected to economic sanctions against the country in recent years.

]]>0Iran suspected culprit behind recent attacks on U.S. bank websitesInvestment banks: Gatekeepers no more as crowdfunding changes the gamehttp://venturebeat.com/2013/01/06/investment-banks-gatekeepers-no-more-as-crowdfunding-changes-the-game/
http://venturebeat.com/2013/01/06/investment-banks-gatekeepers-no-more-as-crowdfunding-changes-the-game/#commentsSun, 06 Jan 2013 20:18:13 +0000http://venturebeat.com/?p=599572Guest:Investment Bankers have traditionally been the gatekeepers of access to the capital markets. It is time for crowdfunding to play a greater role.
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Investment Bankers have traditionally been the gatekeepers of access to the capital markets. It is time for crowdfunding to play a greater role.

The caliber of underwriting firm is often an indication of the quality of the issuing company. The investment banks are paid well for that implicit endorsement, but that puts their reputations on the line. Their success is tied to the execution, after market performance and perception of the deals they complete –so they had better be selective and smart.

However, the banks are not infallible. The capital raising process has been inexorably altered by many different changes to the funding environment. I am not talking just about the botched Facebook IPO either. But the banks are pretty good.

The playing field between institutional investors and “mom and pop” is not level. The market is driven by inefficiencies and the average investor is generally on the wrong side of the spread. The differential comes down to knowledge.

Ironically, retail investors have access to more information today than ever before, but often lack the ability to draw any useful conclusions. Information comes at the tap of a browser. Knowledge is a result of years of experience and access to peers and professionals with insights that go well past the prospectus and can’t be found on Google.

Crowdfunding will be a game changer for thousands of companies that are unable to find capital through traditional means. But I think that the more profound impact will be realized by small investors that will benefit from analysis, both formal and informal, from their peers.

While I know there are many pols and regulators out there who will argue that Crowdfunding will turn into crowdfrauding , I will remind you of the many professionals, analysts and sage financial institutions who got it all wrong.

We forget too quickly the analyst stars who led so many astray. Do you recall Jack Grubman? Paid $25 million a year for his valued opinion, Grubman was banned from the financial industry for life in 2003. The list is long. Jack just happens to be a colorful favorite of mine. As the Wall Street Journal reminds us from time to time, the dart board method of stock selection usually fares pretty well versus the pros.

Let a transparent market evolve for crowdfunding and do not allow a group of mandarin gate-keepers control the outcome. There will always be a place for Investment Banks to create markets and deliver value to their customers. Smaller businesses need access to capital too. These companies will never be efficiently served by large banking groups – at least not in the near future.

]]>0Investment banks: Gatekeepers no more as crowdfunding changes the gameBanks fall victim to simple trojan virus, says Symantechttp://venturebeat.com/2012/12/21/banks-trojan-stabuniq/
http://venturebeat.com/2012/12/21/banks-trojan-stabuniq/#commentsFri, 21 Dec 2012 21:14:52 +0000http://venturebeat.com/?p=594779A new trojan called Stabuniq is infecting financial institutions across the United States, according to Symantec who revealed the threat today.
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Symantec spotted a trojan infecting a number of financial institutions today called Trojan.Stabuniq. The virus is a simple one, and it’s seemingly easy to remove, but its discovery highlights the importance of teaching employees about phishing attacks.

The virus attacks more than just banking institutions; 11 percent of those infected were Internet security businesses. Symantec suggests these companies may purposefully have the trojan installed for research purposes.

“A staggering 39 percent, however, belong to financial institutions,” Symantec said in a blog post. “These financial institutions had their outer perimeter breached as the trojan has been found on mail servers, firewalls, proxy servers, and gateways.”

Symantec further notes that the “the malware authors may simply be gathering information,” perhaps in preparation for something more advanced.

The trojan disseminates through phishing attacks. A phishing attack tricks victims into believing they are clicking on a safe link or downloading a known attachment, when in reality they are being served malware. These attacks can be very simple, such as a written email from a prince in Nigeria asking for bank account information. They can also be slightly more complex =, like “email spoofing” or making an email look like it’s coming from a trusted source.

After an employee falls for the phishing scheme, the trojan downloads to the computer, where it disguises itself among the system’s existing files. It might pretend to be a Java Quick Starter or InstallShield Update Service Scheduler — files that look normal on the surface. Then it starts monitoring and collecting the system’s information such as the name of the computer, the IP address, operating system version, any “running processes,” and so on.

These are sent back to the command and control servers and may also be sent to a number of remote locations including one called “bbcnews192.com.”

It’s not a pretty topic, but bankers have to learn to be good about collecting money from delinquent borrowers. And the better at it they become, the more they’ll be able to lend money to (hopefully good) borrowers in the future.

So BankersLab has created a “gamified” training simulation — a game, really — to train bank employees how to do collections right. It’s not about who will pay a bank the money they owe it or the best way to get results as a Repo Man. Rather, the CollectionLab simulation helps bankers correctly forecast the impact of debt collection decisions over the lifetime of a bank. The game is part of the Serious Games movement or gamification, where game mechanics are used to improve engagement in nongame applications.

With the simulation, bankers can create competing teams that operate virtual portfolios over a 30-year period. They can test debt-collection strategies in real-world conditions.

San Diego, Calif.-based BankersLab tapped the expertise of Neil Seitz, a professor of finance at Saint Louis University and a pioneer in simulation games for the banking industry. He had created simulations based on spreadsheets, but BankersLab brought the decade-old games into the modern era. Seitz served as an adviser to BankersLab. Game designer Robert Zepeda, the founder and chief executive officer of PlayBasis, helped create the modern gamified simulation program, which is web-based.

As the number of delinquencies and write-offs remain stubbornly high, collections managers are faced with big challenges. Delinquencies on residential home loans rose to 10.61 percent in the second quarter, according to the Federal Reserve. The idea is to improve collection skills by turning the learner into a player, said Michelle Katics, the CEO of BankersLab, in an interview with GamesBeat.

“You can think of them as flight simulators for bankers,” said Katics. “They make decisions and see the impacts play out over years.”

To win, players have to operate the most profitable virtual bank with the most satisfied customers. Katics said bankers have to use their resources wisely. If they make a lot of risky loans, they’ll need to hire more collectors. But hiring collectors drives up costs.

If they can only make so many phone calls to delinquent customers, the bankers have to choose which people to call. Some need coaching or reminders to make their payments. The work requires expertise in staffing, collection management, resource allocation, economic analysis, and product growth. Each module in the game is linked to gamified course materials, online learning, and iOS mobile apps.

Is it fun?

“If you’re in this business and this is what you do, then it is fun,” said Katics.

She added, “The secret to successful delinquent collections is finding the right balance between cost and benefit while still maintaining customer satisfaction. We wanted to create a product that taught professionals how to confidently walk this tightrope.”

BankersLab was founded in January, and it has 20 employees. It is self-funded and has four founders: Katics, Kurt Gingher, Gail Galuppo, and M. J. Kim. A bank in India has already signed up to use the simulation.

]]>0Maximize your collections! BankersLab gamifies debt collection (exclusive)Edo nets $15M to bring card-linked offers to small and medium-sized businesseshttp://venturebeat.com/2012/09/13/edo-nets-15m-to-bring-card-linked-offers-to-small-and-medium-sized-businesses/
http://venturebeat.com/2012/09/13/edo-nets-15m-to-bring-card-linked-offers-to-small-and-medium-sized-businesses/#commentsThu, 13 Sep 2012 19:18:45 +0000http://venturebeat.com/?p=530847Edo has raised $15 million in third round funding to brings its local-offers technology to small businesses across the country.
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Edo has raised $15 million in third round funding to brings its local-offers technology to small businesses across the country.

Edo delivers card-linked offers targeted to spenders through credit cards, debit cards, and mobile devices. Unlike many of its competitors, Edo doesn’t require a check-in, or any point-of-sale hardware. Instead, it links to your bank card and then tracks your spending behavior so it knows which offers to send you. Edo directly competes with Cartera and Cardlytics, loyalty companies which are in the race to partner with the nation’s leading banks.

Solutions like these allow retailers to stay competitive. For instance, if you frequently buy sandwiches at Subway (one of Edo’s merchants), you might be offered a free coffee with your next ham and cheese at Quiznos. Edo is currently partnered with 120 banks and more than 200 local and national merchants, including Target, Crate & Barrel, and The Home Depot.

The Nashville, Tennessee-based company says its technology will benefit consumers, retailers, and banks. “Payments and advertising are colliding; to stay competitive, banks must deliver value to cardholders that goes beyond the traditional realm of services, while advertisers are searching for solutions to drive customer acquisition, loyalty, and return on marketing investment,” said Ed Braswell, CEO of Edo, in a statement.

The round was led by VantagePoint Capital Partners, with participation from Baird Venture Partners and other existing investors. Edo has raised a total of $54.3 million to date.

]]>0Edo nets $15M to bring card-linked offers to small and medium-sized businessesMalware related to Stuxnet and Flame found stealing bank informationhttp://venturebeat.com/2012/08/09/guass-bank-stuxnet-flame/
http://venturebeat.com/2012/08/09/guass-bank-stuxnet-flame/#commentsThu, 09 Aug 2012 21:33:55 +0000http://venturebeat.com/?p=506411Kaspersky Lab announced a new piece of malware that specializes in obtaining login information for bank accounts in the Middle East. It's called Gauss and is linked to Flame, Stuxnet, and Duqu.
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Kaspersky Lab announced that it’s discovered a new piece of malware that specializes in obtaining login information for bank accounts in the Middle East. It’s called Gauss and is linked to Flame, Stuxnet, and Duqu.

“Gauss is a complex cyberespionage toolkit, with its design emphasizing stealth and secrecy; however, its purpose was different to Flame or Duqu,” said Kaspersky Lab chief security expert Alexander Gostev in a statement. “Gauss targets multiple users in select countries to steal large amounts of data, with a specific focus on banking and financial information.”

Kaspersky found the malware after digging deeper into Flame, a virus uncovered in May that was billed as one of the most advanced cyberespionage tools to date. Researchers said the malware has “striking resemblances” to Flame in the way it was designed. It seems Gauss shares the same source code from which Flame was built. But its actions are slightly different. While Flame installed a keylogger, turned on the computer’s microphone to record audio, and monitored “communications apps” such as IM, Gauss is focused on obtaining financial information.

Gauss is tailored to steal “access credentials” to Lebanese banks, which include the Bank of Beirut, EBLF, BlomBank, ByblosBank, FransaBank, and Credit Libanais. Non-Lebanese entities that are also targets include Citibank and PayPal. This information, along with browser history, cookies, passwords, system configurations, and more, is sent back to the command and control servers. The malware, however, is in a veritable holding pattern since the command and control servers were shut down in July.

Kaspersky estimates that the number of infections are in the tens of thousands, but as of May around 2,500 infections were recorded. This is lower than Stuxnet, but higher than Flame, which Kaspersky says had around 700 infections.

In June, Kaspersky linked Flame to Stuxnet, the famous malware that hit Iran’s nuclear infrastructure in 2010. Many of Flames functions looked identical to those of Stuxnet’s, spurring Kasperky to dig deeper into the connection. Now the research firm says the two may have had creators that worked closely together, even sharing some of the same source code.

]]>0Malware related to Stuxnet and Flame found stealing bank informationChase earns top marks in Forrester’s new mobile banking benchmarkhttp://venturebeat.com/2012/04/26/chase-earns-top-marks-in-forresters-new-mobile-banking-benchmark/
http://venturebeat.com/2012/04/26/chase-earns-top-marks-in-forresters-new-mobile-banking-benchmark/#commentsThu, 26 Apr 2012 14:41:07 +0000http://venturebeat.com/?p=421759With the rising popularity of mobile banking — reaching 17 percent of U.S. consumers by the end of last year, a figure that’s grown 4X in the past five year — the research firm Forrester has developed a “Mobile Banking Functional Benchmark” to evaluate how banks approach the new wave of devices. Forrester applied its […]
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With the rising popularity of mobile banking — reaching 17 percent of U.S. consumers by the end of last year, a figure that’s grown 4X in the past five year — the research firm Forrester has developed a “Mobile Banking Functional Benchmark” to evaluate how banks approach the new wave of devices.

Forrester applied its new benchmark to the top four banks in the U.S. and found that Chase rose to the top, with a score of 74 out of 100 points. The big break for Chase was in the transactional functionality category, where it earned 26 points more than the average.

“The strong showing results from a wide array of mobile money movement options — transfer functionality, mobile bill pay, and the ability to add a payee, among others — as well as mobile remote deposit capture and other features like mobile P2P,” wrote Forrester’s Peter Wannemacher in a blog post this morning. Chase also scored 90 in the accessibility category.

Forrester says it applies 63 criteria in its mobile banking benchmark and scores them on a 100-point scale. The average score for the biggest four banks in the U.S. was 63. There’s still plenty of room for improvement according to the research firm, as only one bank offered product research and cross-selling through its iPhone app, and none of the banks did well in the mobile personal financial management category.

Banks definitely need to step up their mobile options — the rise of smartphones and tablets is moving much faster than the glacial pace of financial institutions. For example, I’m still waiting for Bank of America to offer mobile check scanning — which Chase, and many others, already offer. Meanwhile, BoA is still touting its envelope free checking deposit as actual innovation.

Mobile banking is a win-win for both banks and consumers, so there’s no excuse not to be more aggressive with rolling out mobile features. Consumers would be able to handle much of their financial errands without waiting in lines, and banks would have less foot traffic (and ultimately fewer irritated customers) to service.

]]>0Chase earns top marks in Forrester’s new mobile banking benchmarkOver 50K Visa and Mastercard credit cards compromised, banks alertedhttp://venturebeat.com/2012/03/30/visa-mastercard-hack/
http://venturebeat.com/2012/03/30/visa-mastercard-hack/#commentsFri, 30 Mar 2012 20:49:32 +0000http://venturebeat.com/?p=410287Cyber-criminals have stolen Visa and Mastercard credit-card data by hacking into payment processors in New York City parking garages. Visa confirmed that the data — enough to create counterfeit cards — was stolen, and both companies are doing damage control by alerting banks and credit unions for the 56,455 cards. According to security researcher, Brian […]
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Cyber-criminals have stolen Visa and Mastercard credit-card data by hacking into payment processors in New York City parking garages. Visa confirmed that the data — enough to create counterfeit cards — was stolen, and both companies are doing damage control by alerting banks and credit unions for the 56,455 cards.

According to security researcher, Brian Krebs, a group of individuals have compromised the a payments processor, rumored to be Global Payments Inc. The group is believed to be New York-based, targeting the payment systems in New York garages. The criminals gained access through the processor to “Track 1 and Track 2 data,” which gives them enough information to make fraudulent purchases on the compromised cards.

Visa and Mastercard have alerted a number of banks and credit unions associated with the cards, warning that they should be on the lookout for fraud.

“Visa has provided payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring and, if needed, reissuing cards,” the company said in a statement, “As always, Visa encourages cardholders to regularly monitor their accounts and to notify their issuing financial institution promptly of any unusual activity.”

The company takes a small jab at the individual business (potentially the NY garages themselves). It explains that each business accepting credit payments is responsible for updating its systems and putting in place the most recent security measures.

According to Krebs, the PSCU is saying 56,455 cards have been compromised, with only around 1.5 percent of those cards actually showing fraudulent charges. Joe Levy, chief technology officer of Solera Networks, believes there may be more to the hacks, which have occurred in the past in cases like Heartland Payment Systems.

“It would not be surprising if the investigation slowly reveals that the breach involved techniques such as web application exploitation, maneuvering from a compromised public system into the internal systems, and that the presence on the network was a longer-term than estimated,” said Levy in an e-mail. “These tend to be common characteristics of these kinds of events. And it underscores the fact that perimeter defenses are imperfect and will almost always be breached by a sufficiently motivated adversary.”

The hack has seemingly been isolated at the third-party payments processor, according to Visa. Visa’s own systems have not been compromised.

]]>0Over 50K Visa and Mastercard credit cards compromised, banks alertedTrouble getting a loan from your bank? ZestCash gets $73M to help the underdogshttp://venturebeat.com/2012/01/19/zestcash-73m/
http://venturebeat.com/2012/01/19/zestcash-73m/#commentsThu, 19 Jan 2012 12:00:02 +0000http://venturebeat.com/?p=378711For most people, getting a loan requires a clean credit record and a strong credit score. Since not everyone’s credit report is spotless, ZestCash offers loans to customers who don’t belong to banks or who don’t have any credit data. The company announced today it has secured $73 million in its second round of funding. […]
]]>For most people, getting a loan requires a clean credit record and a strong credit score. Since not everyone’s credit report is spotless, ZestCash offers loans to customers who don’t belong to banks or who don’t have any credit data. The company announced today it has secured $73 million in its second round of funding.

“ZestCash doesn’t pull any information from credit bureaus. Instead we use uses non obvious variables, like cell phone payment records and how much time applicants spend on our site, to offer loans to our customers,” CEO Douglas Merrill told VentureBeat in an interview.

Most banks approve borrowers for loans based on small amounts of data; usually a credit report and credit score from FICO, a company that evaluates credit risks. Since not every person has enough information on file with FICO, some people are turned away for loans from major lending institutions. ZestCash uses thousands of metrics to offer short-term installment loans to customers who can’t get loans elsewhere.

Each loan is designed by the customer, based on how much money they need — up to $800– and how much time they need to pay it back. ZestCash emphasizes smaller payments over a longer time to pay back its loans to help their customers from getting too deep in debt.

“We will use the $23 million capital from Matrix Partners to add more staff, increase our marketing efforts, and push forward with bringing loans to additional states. We will use the $50 million debt line Victory Park Capital to make loans to customers,” said Merrill.

This fundraising round included $23 million from Matrix Partners and $50 million in debt financing from Victory Park Capital. Lightspeed Venture Partners, GRP Partners, Flybridge Capital and Lighthouse Capital Partners participated as well. ZestCash was founded in 2009 by Douglas Merrill, former Google Chief Information Officer, and Shawn Budde, former Head of Subprime Credit Cards at Capital One and has more than 75 employees. Currently, ZestCash is able to offer loans to customers in Utah, Idaho, South Dakota and Missouri, with more states coming soon.

]]>0Trouble getting a loan from your bank? ZestCash gets $73M to help the underdogsBankSimple rebrands as Simple, opens betahttp://venturebeat.com/2011/11/08/banksimple-simple-beta/
http://venturebeat.com/2011/11/08/banksimple-simple-beta/#commentsTue, 08 Nov 2011 18:55:09 +0000http://venturebeat.com/?p=349691Financial organization company BankSimple is shedding the “bank” and emerging as Simple, now available to consumers in the US. Taking care of finances is an arduous task. It confronts you with bills, loans, savings goals, and other stressful topics. In fact, these cause so much stress, some people opt to ignore their money all together. […]
]]>Financial organization company BankSimple is shedding the “bank” and emerging as Simple, now available to consumers in the US.

Taking care of finances is an arduous task. It confronts you with bills, loans, savings goals, and other stressful topics. In fact, these cause so much stress, some people opt to ignore their money all together. Keeping track of your finances is necessary, however, so why not make it easier by connecting today’s technology and our more widespread willingness to organize our finances online?

That’s what the newly renamed Simple (how did they get that URL?) is doing with its front-end financial organizing system.

“Simple is a better representation of what we aspire to. It releases us from the constraints of an industry in desperate need of innovation,” said Joshua Reich, Simple chief executive officer, in an official blog post.

While the financial industry is under fire from Occupy Protests, Simple is attempting to create something new. When you work with Simple, you aren’t quitting the banking system, but you are quitting the bank you usually work with. To replace it, Simple takes your money and invests it in a number of FDIC-insured institutions on your behalf. According to Adam Erlebacher, the vice president of marketing for Simple, the company doesn’t work with the “too big to fail” banks, in exchange for small and mid-sized ones. These institutions are partners with Simple, which has agreements in place concerning fees and other regulations.

“When we’re going out and selecting bank partners we are looking for banks that share our values,” said Erlebacher in an interview with VentureBeat. “As long as bank partners are in line with our philosophy of no surpise fees and clear and transparent terms and conditions, then we’re happy to work with them.”

The BanCorp Bank in Delaware is Simple’s launch partner.

Simple’s front-end acts as your organizing dashboard, allowing you to see transactions under the “safe-to-spend” header. This view does not show you all of the money you have, but rather the amount of money you can spend per day to stay within your goals. These goals include savings goals, bills commitments, loan paybacks, etc. You set the goals, and Simple calculates what you can spend each day to stay within those parameters.

Setting up a savings goal in Simple is fairly easy to do as well. On the savings page, you enter the amount of money you’d like to save and scroll a bar over to the date by which you’d like to have the money. You can lock a savings account down, to deny yourself access, or pause it if you don’t want to add any more money to that pot.

In creating this dashboard, one of Simple’s main goals was to make the search function as close to natural language as possible. You can type something like, “Restaurant from November in Portland” and Simple will find the restaurant for you. You can also search based on amounts spent, and each transaction comes with a detailed description as well as a map to the location of the transaction. If these details are often correct, given the direct connection to the bank, it’ll be a significant improvement from the Mint finance app, which regularly gets transaction locations wrong.

Like Mint, Simple also pre-categorizes your transactions and allows you to create your own categories. It also lets you tag transactions with names of friends, or other reminders to help you recall purchases at the end of the month.

“There are lots of people who feel really comfortable with these intense budgeting platforms,” said Erlebacher, “But for most people, the idea is getting fast answers from your finances.”

Regular customers will be able to sign up for Simple by requesting a beta invite. Those with an alpha set up do not have to re-sign-up for the beta. In its blog post, Simple reminds, “[we] replace your bank, but we are not a bank,” which may set off alarms with people. However, while having a third party distribute your money amongst different institutions is jolting, that’s a price you’ll pay in any industry for convenience.

See below of a video on how Simple works:

]]>0BankSimple rebrands as Simple, opens betaProsper takes on Wall Street, hopes to rewire bankinghttp://venturebeat.com/2011/11/02/prosper-takes-on-wall-street/
http://venturebeat.com/2011/11/02/prosper-takes-on-wall-street/#commentsThu, 03 Nov 2011 02:13:43 +0000http://venturebeat.com/?p=347556Peer-to-peer lending startup Prosper makes no secret of its support for the Occupy Wall Street movement, which seeks to break the hold of banks on the American political process. Prosper wants to do a similar thing, by creating a sort of bank that is owned by and run for the people. Based near the OWS […]
]]>Peer-to-peer lending startup Prosper makes no secret of its support for the Occupy Wall Street movement, which seeks to break the hold of banks on the American political process. Prosper wants to do a similar thing, by creating a sort of bank that is owned by and run for the people.

Based near the OWS encampment in San Francisco’s Justin Herman Plaza, Prosper is using crowdfunding site Indie Gogo to host its 99 Sandwiches campaign, raising money to donate 99 sandwiches per day to feed the protesters.

But Prosper’s own platform has the power to do more than donate sandwiches. It could shake up the banking industry at large, if its model catches on.

“Everybody knows that banking is broken, the system is broken,” Prosper co-founder and chief executive officer Chris Larsen told VentureBeat at Crowdconf, a crowdsourcing conference in San Francisco, today. “There’s no reason with the technology we have today, all this great stuff, that you couldn’t completely rewire banking in five years.”

That’s a bold claim.

Prosper makes it possible for individuals to lend out money and earn interest on the money they lend, which has been the sole province of banks. But the reason this was not possible before wasn’t lack of technology, but because of regulations meant to protect banks.

If successful, Larsen thinks that the future of the banking industry could be Silicon Valley, not Wall Street.

“You need banking, but you don’t need banks,” said Larsen.

In order to launch his company, Larsen invested $10 million and spent five years fighting through a bramble of regulations meant to protect banks and stifle innovation. As evidence of the banking industry’s hold over the political system, Larsen pointed out that there are 61 members of the House Committee on Financial Services, the legislative entity that governs banking and finance. He said that there are perhaps two startups that exist today that are able to charge interest on peer-to-peer transactions, out of as many as 100 that were started around the same time as Prosper.

In a recent blog post, “Why Hasn’t a Facebook of Banking Emerged,” Larsen implored anti-Wall Street protesters to use new technologies to support the movement, and support innovation.

…[W]hile it’s important to keep up the demands for change, we also need you to start using these new technologies and spreading the word when you find one that excites you. Use a crowdfunding site to support a project, make a $25 bid on a peer-to-peer lending site. Start-ups are, well, start-ups, and every show of community support could make the difference between obscurity and escape velocity. Vote with your wallet.

This last point is an important one.

Larsen does, however, think there’s a role for banks in preventing their own demise, and he encourages them to make their infrastructure available to startups, as a platform for innovation.

“[Y]ou don’t have to just stand by and get pummeled….Even if these start-ups are tiny now and even if their stated mission is to destroy your franchise, partner with them. Technology is not going away, it’s accelerating with or without you. It’s time to stop cutting your R&D budgets and start embracing new, big ideas.

While Chase bank may have an iPhone app that allows customers to make deposits to their accounts by taking photos of checks, Larsen says this type of solution is “bolting on little pieces to a system that isn’t serving people well.”

Larsen’s last company was eLoan, which he co-founded in 1998, and eventually took public.

Prosper is going to need luck, time and a lot of support if its going to have a chance of taking on the multi-trillion-dollar financial industry, which accounts for 7 to 8 percent of the U.S. gross domestic product, twice as large a proportion as it commanded in the 1960s. Chances are slim that executives at banking giants like Citibank or Bank of America are worried much about Prosper, if they have even heard of it.

Such long odds don’t daunt Larsen, who has passion to push him forward.

“We’re in a crisis here. We have a yield-starved world, and we have a credit-starved world, which is kind of funky. That means banking is truly not working.”